Walker Igleheart\’s Blog

As a real estate agent I have spent years learning about real estate, and can say with some pride that I know a thing or two about it. And, like most everyone else on earth, I have spent years seeking happiness, and think I know a thing or two about it as well. I was already prepared to make a lifelong study of real estate, but now I’m realizing that happiness is likewise a subject that might require lifelong study as well. What do real estate and happiness have to do with each other? Well, nothing, and everything.

The difficult times of the past few years have taught me some valuable lessons: that some of what I thought I knew about happiness was just plain wrong, and that even when I was right, much of what I “knew” intellectually was not fully internalized and applied to my day to day life.

In case you’ve been living under a rock, you may have noticed that the real estate market has changed dramatically over the last 5 years or so, and not for the better. Not just the real estate market but the entire world as we knew it has changed dramatically. Those of us whose assets and retirement were mostly tied up in home equity are looking at an entirely new, and insecure future. Our nest eggs are decimated, our future uncertain. Many people owe more on their houses than the houses are worth. Ouch.

Likewise, the stock market, for anyone invested before 2000, is a grave yard where lies buried many a budding young fortune. The events of the last 10 years, starting with the stock market crash in 2000, followed by 9/11, the outsourcing of manufacturing jobs, the outsourcing of “information” jobs, domestic terrorism, the banking collapse, the bail-outs, the real estate collapse, the ballooning federal deficit, the dysfunctional political system, climate change, storms, earthquakes, droughts, etc. etc. have all contributed to a gnawing sense of fear of the future that permeates not just this country, but virtually the entire world. The future ain’t what it used to be.

I think it’s safe to say that for most people, our sense of overall happiness has declined along with our assets and with our sense of a secure future. We go through the day with a gnawing sense of unease and “what if’s”: what if the housing market continues to erode, the stock market crashes, we get “downsized, China sells our bonds, all manufacturing leaves this country, the political system becomes entirely frozen, terrorists strike again, the climate becomes more unstable, floods and droughts get worse… ay yi yi! It can drive you nuts worrying about all the things that can go wrong!

And so we are less happy, because our sense of happiness is inextricably tied to our sense of security, financial and otherwise, and with our comfort level with our vision of the future, right? It’s obvious that happiness and security are related. But here’s an interesting question: Does security exist?

Let’s say you have a million dollars in the bank – make it 10 million, whatever will make you feel financially “secure”. But all that money won’t protect you against any host of debilitating diseases. What about car wrecks and fires and floods and a myriad of physical injuries. What if those afflictions strike our loved ones? Financial security only goes so far – real security, real confidence that we’ll be just fine in the “foreseeable” future, isn’t really even possible. The future isn’t foreseeable. Terrible things can happen to any of us at any moment.

Think of all the people you know. I’ll bet you can rate them on their overall comfort level with the future: ranging from those that worry all the time to those that seldom worry about anything. And I’ll make you a bet: there’s little correlation between the amount of worry a person feels, and their financial situation. And I’ll take it the next step: likewise there’s little correlation between a person’s “happiness” and their financial situation.

I’ll bet we all have among our friends and acquaintances some relatively “poor” people and some relatively “rich” people. Think about it for a second – can you honestly say the rich people you know are happier than the “poor” people you know? What’s up with that? If financial security isn’t related to happiness, then why aren’t we as happy as we were before the world seemingly started falling apart?

A psychologist recently did a very interesting study. He interviewed 2 groups of people 6 months after a dramatic life changing event. The first group consisted of people who had won the lottery; the second group consisted of people that had 6 months earlier suddenly become paraplegics or quadriplegics. In the study he asked the members of each group a very simple question: “Are you happier or sadder than you were before your life-changing event”?

Of course the lottery winners were happier and the para and quadraplegics were sadder than they’d been before the big events. That’s just common sense, right? Uh…wrong! What the psychologist found was that there was NO CHANGE in either group’s overall feeling of happiness from pre-event to post-event!! Huh? What does this mean?

It means that not only is happiness not related to our financial condition, it’s not even related to our physical condition! So, what is happiness? What is it related to? Where does it come from? How do we achieve it?

Good question. Worthy of study. I’m on it…

Almost every day someone asks me how they can get a deal on a foreclosed house. It sounds so simple: find a house in foreclosure, and then buy it for really cheap! Sign me up for that deal! Of course, as in all things in life, if it was easy everyone would do it. There is a learning curve to buying a foreclosure, and a vocabulary that needs to be learned: Pre-foreclosure, Short Sale, Foreclosure Auction, and REO, for starters. I decided to take a little time a do a quick explanation of what some of the common real estate jargon means, as well as give you a little insight into the advantages and disadvantages of each.

It’s possible to get the greatest deal of your life buying a “foreclosed” house. It’s also possible to get the worst deal of your life. A little knowledge can save you a lot of agony. The first thing you must know is that there are 3 phases of foreclosure: Pre-Foreclosure (which includes Short Sales), Foreclosure Auction, and REO.

1. Pre-foreclosure. This is the phase that begins when a homeowner is 30 days behind in their mortgage payment. At that time, the bank usually notifies the homeowner that they must make their payment immediately or the bank will begin foreclosure proceedings. After the 30 days if the bank chooses to foreclose, it must file a public notice of that intent. Typically banks began foreclosing after 3 months of missed payments, although in the current market, with so many homeowners behind on payments, often the bank will try to work out an arrangement with the owner. For buyers looking for a bargain, this is an excellent time to buy a house. You are dealing with a very motivated seller who is desperate to sell the house before the bank takes it. There are many investors that seek out homeowners in the pre-foreclosure phase, often by way of newspaper ads and “We Buy Houses” and “Stop Foreclosure” signs beside the road.

Short Sales: In the current real estate market, though, many banks are giving homeowners more time to satisfy their debt, or to sell the house, and many houses in pre-foreclosure are popping up on the MLS with very attractive prices on them. Most buyers need look no further for a great deal on a house. This is also the phase in which “Short Sales” are offered. A Short Sale occurs when the bank agrees to allow the owner to sell the house for less than he/she owes the bank, and to hold off on foreclosing while the owner attempts to sell the house him/herself. Short Sales are usually anything but short, often lasting many months, and can be very frustrating for all concerned. They are best suited for buyers who don’t mind waiting for months only to hear their offer was rejected by the bank.

2. Foreclosure Auction. If the homeowner is not able to make the payments, or to sell the home quickly enough, or to work out a payment arrangement or short sale with the bank, the house will go into foreclosure. In foreclosure, the bank takes over ownership of the house, and then puts it up for auction. The bidding price starts at the amount of money owed to the bank. i.e.: the amount of the first mortgage, plus any missed payments, plus associated legal fees. They are required to sell it for any amount, even $1, over the starting price. Quite often this seems to be a very reasonable price for the house, and it’s possible for very astute investors and homebuyers can get great deals.

But there is a great risk in buying houses at bank foreclosure sales, and it is not a place for novices. The first problem is that the bank will not guarantee clear title to the property, meaning that you could buy a house and find that there are liens against it that need to be paid off, or relatives that still think they the home is theirs. The second problem is that you cannot inspect the house, so after buying you could find out about a host of unknown problems, from structural issues to codes violations and on and on. Or the former owners or tenants could still live in the house and refuse to leave, requiring a legal battle to extricate them. In other words, unless you know a great deal about a house, buying it at the foreclosure sale is not a great idea. That’s why most investors shun them, and the majority of houses at foreclosure sales end up back in the hands of the bank – no one was willing to outbid the bank, even though the price seemed really low. The problems with foreclosure sales are a) no guarantee of clear title, b) no inspections before buying, and c) you must come up with a full cash payment usually within 30 days, with a sizeable cash down payment the day of the sale. As I said, it’s not a game for novices.

3. REO. REO stands for “Real Estate Owned” by the bank, and refers to the property after it has been foreclosed on and the bank has bought it back at the foreclosure auction. At this point the bank has usually cleared up any liens and title issues, and has turned it over to a real estate agent to sell on the MLS. This is the safest time to buy a foreclosure because a) all the liens have been satisfied and the bank usually guarantees clear title to the property, b) you have ample time to submit the property to a complete inspection, and c) you can finance it as you would any other house.

So to sum it up, if you’re looking for a great deal on a “foreclosure” house, you have two “safe” options.

1) Look for sellers of homes in Pre-Foreclosure and deal directly with them. Start by calling on “For Sale by Owner” signs. Some of them are in Pre-Foreclosure. You can also subscribe to websites listing homeowners behind on payments, or just go down to the courthouse and look them up in the records. Keep in mind that the owners in pre-foreclosure are under stress, and have been hounded by bill collectors and other investors. They are seldom in a good mood or receptive. Another way is to place an ad in a newspaper or on the net: “We Buy Homes ”. Your phone will ring with desperate sellers. Again, they are an unhappy lot, and quite often not thinking clearly due to stress. If you are persistent, a good negotiator, a good psychologist, and able to figure out what their home is worth, you can possibly get a great deal on a house. But…you must be willing to move very quickly – i.e. come up with cash in a very short period of time. It is mandatory that you have a loan, or preferably cash, in place before you even begin negotiating.

2) Buy an REO. This is my recommendation. It’s the safest, and easiest way to get a deal. How do you find REOs? Easy, they’re on the MLS. They’re usually easy for a Realtor to spot due to the financing and “proof of funds” requirements listed on the MLS sheet, usually visible only to Realtors. Some REO’s are in pretty bad shape due to neglected maintenance. Naturally they’ll go for cheap. But some are in tip top condition. Banks, by the way, hate to own real estate, and can be considered “motivated sellers”, so lowball offers are perfectly acceptable, within reason.

Bottom Line: If you have lots of time to search out deals, have a good home inspector, know how to figure out what a house is worth, are a good negotiator, have a good lawyer to steer you through the process, and have quick access to funds, you can get great deals by buying Pre-Foreclosures directly from sellers. For most people, though, the safest way, easiest, and surest way is to buy the best home at the best price you can find on the MLS, regardless of whether it’s been foreclosed or not. Good luck!

I™ve just sold a Condo property at 303 1706 18th Ave S. in Nashville. Come and visit my site to see other properties in that area. If you are interested in looking for or selling your home, please Contact Me.

On May 29, 2011 at 14:00 PM, you are invited to an Open House at 2720 N. Highlands Dr in Nashville. If you are looking for a property in this area, don™t miss this rare opportunity to visit this magnificent property. For a preview of this property, check out my site at iHeartTeam.com. Please do not hesitate to Contact Me if you have any questions or wish to schedule a private showing.

Check out this new Single-family property that I just posted on my Web site. It is at 1433 Wexford Drive Land in Nashville.

Check out this new Single-family property that I just posted on my Web site. It is at 1433 Wexford Downs Lane in Nashville. This Single-family property has 4 bedrooms and 3 baths.

Check out this new Condo property that I just posted on my Web site. It is at 303 1706 18th Ave S. in Nashville. This Condo property has 2 bedrooms and 2 baths.

Check out this new Condo property that I just posted on my Web site. It is at 303 1706 18th Ave S. in Nashville. This Condo property has 2 bedrooms and 2 baths.